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TheStreet Open House

Packaged Food Stocks: Year in Review

NEW YORK ( TheStreet) -- Everything is relative in the stock market. But with only 17% year-to-date gains, it's hard to get excited about the this year's performance of the packaged foods industry when it lags the 25% jump of the S&P 500 (GSPC). For that matter it also lags the performance of food distribution companies. However, that's not to say investors haven't done well. That is, of course, if they knew not only what to buy, but when.

Leading the way with 80% year-to-date gains is Green Mountain Coffee Roasters (GMCR), which added a much needed jolt to an industry that has been marred by weak volumes and slumping prices. But I have to admit, this is one performance that I didn't see coming, even after Green Mountain posted 8% decline for all of 2012.

Green Mountain's business practices (specifically its accounting, which has faced SEC scrutiny) have always kept me at bay. Not to mention, hedge-fund manager David Einhorn has a sizable short position on the company. Einhorn is not known to be wrong very often.

[Read: Greenberg: And the Worst CEO of 2013 Is...?]

Nevertheless, those who placed their bets on this company are sitting pretty, if a little jittery. Because I couldn't rest easy heading into 2014 with 80% gains on the table and believing that things can get better. The odds are that they won't. For now, Green Mountain's much maligned management deserves plenty of credit for having regained the Street's trust.

Along those lines, I would worry about Diamond Foods (DMND), which, despite its own history of SEC inquiries, has enjoyed year-to-date stock price gains of 90%. The company's alleged infractions, which include payments to walnut farmers, were not as costly as those of Green Mountain. In fact, given that the company is in a much better shape today than it were last year, as with ConAgra Foods (CAG), I expect Diamond shares to continue their climb in 2014.

ConAgra is interesting for a multitude of reasons. Now, I've heard disappointment about the company's 11% gains. But we have to keep this performance in the context of where this company has been. ConAgra has never really been a consistent outperformer. And this year was no different. Management is still working to synergize the value they envisioned from the Ralcorp acquisition.

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